Banks criticised by regulator as 42% of charities report experiencing poor service

07 Mar 2024 News


The Charity Commission has criticised the banking sector’s response to its calls for improvements after 42% of trustees reported experiencing bad service in the past year.

In survey findings published today, the regulator reported that 6% of respondents had experienced account freezes or being blocked over the past year, while 7% said their bank had lost their records. 

Commission chief executive Helen Stephenson said the figures demonstrated the “extent and impact of the appalling service charities receive from some banks”.

This follows the Commission, along with its sister regulators in Scotland and Northern Ireland, writing to the UK’s main high street banks in November to demand “urgent action to help hard-pressed charities”.

Today, Stephenson said she had been disappointed with the response so far.

Bankers’ trade group UK Finance said it would shortly publish guidance to “help charities get the best out of the financial services sector”.

Other banking difficulties reported

Some 2,541 trustees responded to the Commission’s online survey last month, conducted by research partner BMG.

In response, 32% said they had faced issues when trying to update their charity’s contact details or signatories.

Moreover, 18% had found difficulty trying to open a new bank account while 15% found it challenging to comply with identity requirements set by their bank.

Meanwhile, 14% said they found it difficult to understand what their bank requires of them.

Commission CEO ‘disappointed’ with banks’ response

Stephenson said: “I’m shocked, but not surprised by these new figures, which offer undeniable evidence of the extent and impact of the appalling service charities receive from some banks. 

“It is simply not good enough that volunteer trustees, who are giving of their free time to serve society, are faced with such unnecessary challenges in managing their charities’ money. 

“We have worked behind the scenes with banks to improve the service they provide to charities. So far, I have been disappointed with their response.

“I hope this new research sends a message to the CEOs of high street banks that change is needed now.”

UK Finance: Decisions to close accounts not taken lightly

A spokesperson for UK Finance said it would publish guidance for charities in the near future.

“We understand the impact account closures can have and therefore any decision to close an account is never taken lightly and is done in line with legal and regulatory obligations,” they said.

“We have been working closely with a wide range of community and charity organisations to understand the issues and challenges they are experiencing.

“As part of our work we will shortly be publishing detailed guidance to help charities get the best out of the financial services sector.

“Our members will also continue to review and enhance the services they offer charities.”

Barclays: ‘We understand that it can be more difficult for charities’

The Financial Times reported that Stephenson said the Commission’s poll suggested debanking occurred most frequently with Barclays, however the regulator told Civil Society this was based on anecdotal evidence.

A Barclays spokesperson said: “We are required to keep up to date information regarding our customers’ accounts, as part of our ongoing responsibility to help prevent financial crime, and to meet our regulatory obligations.

“Therefore, it is very important that account holders respond to these requests from their bank, so that their accounts remain compliant. 

“We understand that it can be more difficult for charities, clubs and associations to provide this information as a result of changes in trustees or more complex mandates.

“As a result, we have enhanced the support available for these customers in evenings and weekends to help them.

“We only ever close accounts as a last resort after multiple, repeated communications over the course of many months.”

CFG: Not surprised by survey results

The Charity Finance Group (CFG) said it was pleased the survey had been commissioned by the regulator and not surprised by its results.

“However, like Helen Stephenson, we’re also disappointed with the pace of response and change. We would like to see a stronger commitment from UK Finance and the individual banks to finding solutions,” said Clare Mills, director of policy and communications.

“When banking services are inaccessible or fall short, people are forced to find alternative ways to manage money.

“This can fly in the face of good governance and financial management, and increase risk for the organisation and the individual trustees.

“Widespread use of work-arounds can go wrong. When that happens public trust in the charity sector as a whole can be eroded.

“We’ll continue working together with all parties, including the Charity Commission and UK Finance, to do all we can to ensure public trust remains high whilst finding the right solutions.” 

MCF: Banking problems felt by aid charities in particular

Fadi Itani, chief executive of the Muslim Charities Forum (MCF), said his organisation’s members had experienced many of the issues detailed in the survey for a long time.

“These access issues have then been compounded further by debanking of services with little to no explanation or notice,” he said.

“MCF continues to be very concerned by the scale of this issue and in particular how this impacts those charities who deliver aid internationally and here in the UK.

“Ultimately these issues put lives at risk, freezing access to funds or delaying aid in times of crisis.

“It also makes it very difficult for those working in charities to do their roles effectively.

“We join the Charity Commission in this and call upon the banking sector to urgently review and reform charity banking services to improve delivery and access to essential aid.”

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